M/s.

Nandhakumar & Sundaran, Chartered

Accountants
Search w eb

Resources >

Menu
Home

Comparison between Partnership Firm,

About Us
Services
Audit & Assurance

Company and LLP

Due Diligence
Accounting Service
Advisory Services
Indirect Tax
Services
Management
Consulting

Category

Partnership
is
prevailed by The
Indian Partnership
Act, 1932 and
various
Rules
made there under

Registration

Registration
optional

Compliance
Calendar
Company & LLP
Formation

Contact Us
Sitemap

open in browser PRO version

Company

Prevailing Law

Resources

Comparison
between
Partnership Firm,
Company and LLP

Partnership

Are you a developer? Try out the HTML to PDF API

Companies
prevailed
Companies
1956

LLP
are Limited
Liability
by Partnership
are
Act, prevailed by The
Limited
Liability
Partnership
Act,
2008 and various
Rules made there
under

is Registration with Registration

Registrar of ROC Registrar of
required.
required.

with
LLP

pdfcrowd.com

open in browser PRO version

Creation

Created
Contract

Distinct entity

Not a separate Is a separate legal Is a separate legal

legal entity
entity under the entity
under the
Companies Act, Limited
Liability
1956.
Partnership
Act,
2008.

Name of Entity

Any name as per Name to contain

choice
'Limited' in case of
Public Company
or 'Private Limited'
in case of Private
Company as suffix.

Name to contain
'Limited
Liability
Partnership' or 'LLP'
as suffix.

Cost of Formation

The
Cost
Formation
negligible

The
cost
of
Formation is statutory
filling
fees,
comparatively lesser
than the cost of
formation
of
Company.

Perpetual

It does not have It has perpetual It

Are you a developer? Try out the HTML to PDF API

by Created by Law

of Minimum Statutory
is fee
for
incorporation of
Private Company
is Rs.6,000/- and
minimum Statutory
fee
for
incorporation of
Public Company is
Rs. 19,000/-

Created by Law

has

perpetual
pdfcrowd.com

open in browser PRO version

Succession

perpetual
succession
and succession
and
succession as this members
may partners may come
depends upon the come and go.
and go
will of partners

Charter Document

Partnership Deed
is a charter of the
firm which denotes
its
scope
of
operation
and
rights and duties of
the partners

Memorandum and
Article
of
Association is the
charter of the
company
that
defines its scope of
operation.

LLP Agreement is a
charter of the LLP
which denotes its
scope of operation
and rights and duties
of the partners vis-vis LLP.

Common Seal

There
is
no It denotes the
concept
of signature of the
common seal in company
and
partnership
every
company
shall have its own
common seal

It
denotes
the
signature and LLP
may have its own
common
seal,
dependant upon the
terms
of
the
Agreement

Formalities of
Incorporation

In
case
of
registration,
Partnership Deed
along with form /
affidavit required
to be filled with
Registrar of firms
along with requisite

Various eforms are

filled with Registrar of
LLP with prescribed
fees

Are you a developer? Try out the HTML to PDF API

Various
eforms
along
the
Memorandum &
Articles
of
Association
are
filled with Registrar
of Companies with
prescribed fees

pdfcrowd.com

filing fee

open in browser PRO version

Legal Proceedings

Only
registered A company is a A LLP is a legal entity
partnership
can legal entity which can sue and be sued
sue third party
can sue and be
sued

Foreign
Participation

Foreign Nationals Foreign Nationals Foreign Nationals can

can not form can be a member be a Partner in a
Partnership Firm in in a Company.
LLP.
India

Number of
Members

Minimum 2 and 2 to 50 members

Maximum 20
in case of Private
Company
and
Minimum
7
members in case of
Public Company.

Ownership of
Assets

Partners have joint

ownership of all
the
assets
belonging
to
partnership firm

Rights / Duties /
obligation of the
Partners /

Rights / Duties / Rights / Duties / Rights / Duties /

obligation of the obligation of the obligation of the
partners
are directors
are partners are governed

Are you a developer? Try out the HTML to PDF API

Minimum 2 partners
and there is no
limitation of maximum
number of partners.

The
company The LLP independent
independent of the of the partners has
members
has ownership of assets
ownership
of
assets

pdfcrowd.com

open in browser PRO version

Managing Partners
/ Directors

governed
by governed by AOA by LLP Agreement.
Partnership Deed. and
resolution
passed
by
shareholders
or
directors.

Liability of
Partners/Members

Unlimited. Partners
are severally and
jointly liable for
actions of other
partners and the
firm and liability
extend to their
personal assets.

Generally limited to
the
amount
required to be paid
up on each share.

Limited, to the extent

their
contribution
towards LLP, except
in case of intentional
fraud or wrongful act
of
omission
or
commission by the
partner.

Tax Liability

Income
of
Partnership
is
taxed at a Flat rate
of 30%
plus
education cess as
applicable.

Income
of
Company is Taxed
at a Flat rate of
30%
Plus
surcharge
as
applicable.

Income of LLP is
taxed at a Flat rate of
30% plus education
cess as applicable.

Principal/Agent
Relationship

Partners are agents The directors act Partners act as agents

of the firm and as agents of the of LLP and not of the
other partners.
company and not other partners.
of the members

Transfer /

Not

Are you a developer? Try out the HTML to PDF API

transferable. Ownership is easily Regulations relating to

pdfcrowd.com

Inheritance of
Rights

In case of death transferable.

the legal heir
receives
the
financial value of
share.

Transfer of Share / In case of death of

Partnership rights in a partner, the legal
case of death
heirs have the right
to get the refund of
the
capital
contribution
+
share
in
accumulated
profits, if any.
Legal heirs will not
become partners

open in browser PRO version

transfer are governed

by
the
LLP
Agreement .

In case of death of
member,
shares
are transmitted to
the legal heirs.

In case of death of a
partner, the legal heirs
have the right to get
the refund of the
capital contribution +
share in accumulated
profits, if any. Legal
heirs will not become
partners

Director
Identification
Number /
Designated Partner
Identification
Number (DIN /
DPIN)

The partners are Each director is

not required to required to have a
obtain
any Director
identification
Identification
number
Number
before
being appointed as
Director of any
company.

Each
Designated
Partners is required to
have a DPIN before
being appointed as
Designated Partner of
LLP.

Digital Signature

There
is
requirement

Are you a developer? Try out the HTML to PDF API

no As eforms are As eforms are filled

of filled electronically, electronically, atleast
pdfcrowd.com

obtaining
Signature

open in browser PRO version

Digital atleast
one one
Designated
Director
should Partner should have
have
Digital Digital Signatures.
Signatures

Dissolution

By
agreement,
mutual
consent,
insolvency, certain
contingencies, and
by court order.

Transferability of
Interest

A partner can A member can A partner can transfer

transfer his interest freely transfer his his interest subject to
subject to the interest
the LLP Agreement
Partnership
Agreement

Admission as
partner / member

A person can be A person can

admitted as a become member
partner as per the by buying shares of
partnership
a company.
Agreement

A person can be
admitted as a partner
as per the LLP
Agreement

Cessation as
partner / member

A person can
cease to be a
partner as per the
agreement

A person can cease

to be a partner as per
the LLP Agreement
or in absence of the
same by giving 30

Are you a developer? Try out the HTML to PDF API

Voluntary or by Voluntary or by order

order of National of National Company
Company
Law Law Tribunal.
Tribunal.

A
member
/
shareholder
can
cease to be a
member by selling
his shares.

pdfcrowd.com

days prior notice to

the LLP.

open in browser PRO version

Requirement of
Managerial
Personnel for day to
day administration

No requirement of
any
managerial;
personnel
,
partners
themselves
administer
the
business

Directors
are Designated Partners
appointed
to are responsible for
manage
the managing the day to
business and other day business and
statutory
other
statutory
compliances
on compliances.
behalf of the
members.

Statutory Meetings

There
is
no
provision in regard
to holding of any
meeting

Board Meetings There is no provision

and
General in regard to holding of
Meetings
are any meeting.
required
to
conducted
at
appropriate time.

Maintenance of
Minutes

There
is
no The proceedings of
concept of any meeting of the
minutes
board of directors
/ shareholders are
required to be
recorded
in
minutes.

Voting Rights

It depends upon Voting rights are Voting rights shall be

Are you a developer? Try out the HTML to PDF API

A LLP by agreement
may decide to record
the proceedings of
meetings
of the
Partners/Designated
Partners

pdfcrowd.com

the
partnership decided as per the as decided as per the
Agreement
number of shares terms
of
LLP
held
by
the Agreement.
members.
Remuneration of
The firm can pay
Managerial
remuneration to its
Personnel for day to partners
day administration

open in browser PRO version

Company can pay

remuneration to its
Directors subject
to law.

Remuneration
to
partner will depend
upon
LLP
Agreement.

Contracts with
Partners/Director

Partners are free Restrictions

on Partners are free to
to enter into any Board regarding enter
into
any
contract.
some
specified contract.
contracts, in which
directors
are
interested.

Maintenance of
Statutory Records

Required
to
maintain books of
accounts as Tax
laws

Required
to Required to maintain
maintain books of books of accounts.
accounts, statutory
registers, minutes
etc.

Annual Filing

No
return
is
required to be filed
with Registrar of
Firms

Annual Financial
Statement
and
Annual Return is
required to be filed
with the Registrar

Are you a developer? Try out the HTML to PDF API

Annual Statement of
accounts
and
Solvency & Annual
Return is required to
be filed with Registrar
pdfcrowd.com

of
Companies of Companies every
every year.
year.

open in browser PRO version

Share Certificate

The ownership of
the partners in the
firm is evidenced
by
Partnership
Deed, if any.

Share Certificates
are
proof
of
ownership
of
shares held by the
members in the
Company

The ownership of the

partners in the firm is
evidenced by LLP
Agreement.

Audit of accounts

Partnership firms
are only required
to have tax audit of
their accounts as
per the provisions
of the Income Tax
Act

Companies
are
required to get
their
accounts
audited annually as
per the provisions
of the Companies
Act, 1956,

All LLP except for

those having turnover
less than Rs.40 Lacs
or
Rs.25
Lacs
contribution in any
financial year are
required to get their
accounts
audited
annually as per the
provisions of LLP
Act 2008.

Applicability of
Accounting
Standards.

No
Accounting Companies have to
Standards
are mandatorily
applicable
comply
with
accounting
standards

The necessary rules in

regard
to
the
application
of
accounting standards
are not yet issued.

Are you a developer? Try out the HTML to PDF API

pdfcrowd.com

open in browser PRO version

Compromise /
arrangements /
merger /
amalgamation

Partnership cannot
merge with other
firm or enter into
compromise
or
arrangement with
creditors
or
partners

Companies
can LLPs can enter into
enter
into Compromise
/
Compromise
/ arrangements
/
arrangements
/ merger
/
merger
/ amalgamation
amalgamation

Oppression and
mismanagement

No remedy exist ,
in
case
of
oppression of any
partner
or
mismanagement of
Partnership

Provisions
providing
for
remedy
against
Oppression and
mismanagement
exists

No provision relating
to redressal in case of
oppression
and
mismanagement

Credit Worthiness
of organization

Creditworthiness
of firm depends
upon goodwill and
creditworthiness of
its partners

Due to Stringent
Compliances
&
disclosures under
various
laws,
Companies enjoys
high degree of
creditworthiness.

Will
enjoy
Comparatively higher
creditworthiness from
Partnership due to
Stringent regulatory
framework but lesser
than a company.

Whistle Blowing

No such provision
is provided under
Partnership Act,
1932

No such provision
is provided under
the
Companies
Act, 1956.

Provision has been

made to provide
protection
to
employees
&
partners,
providing
useful
information

Are you a developer? Try out the HTML to PDF API

pdfcrowd.com

during an investigation
or convicting any
partner or firm.

Comments
Report Abuse | Powered By Google Sites

open in browser PRO version

Are you a developer? Try out the HTML to PDF API

pdfcrowd.com